As higher prices seep into broader economy, U.S. Fed officials consider faster hikes

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More evidence this week of hot inflation in the U.S. was unpleasant news for the U.S. Federal Reserve, not to mention consumers.

WASHINGTON — More evidence this week of hot inflation in the U.S. was unpleasant news for the U.S. Federal Reserve, not to mention consumers: Rising prices may be spreading beyond the one-time shocks from tariffs and high gas prices into the wider economy, meaning that mortgages, credit cards and other forms of borrowing are likely to become increasingly expensive.

Tuesday’s consumer price index report showed broadly rising costs across a range of goods and services, some with little connection to more expensive oil and gas or surging investment in artificial intelligence data centers, another factor blamed for worsening inflation. And there is increasing anxiety among Fed officials that higher oil prices stemming from the Iran war may last longer than previously thought.

A key issue debated by Fed policymakers for months has been whether inflation would cool on its own if the Iran war ended and oil prices fell and as the impact of tariffs faded. But government data suggested inflation rose to four per cent in October compared with a year ago, up from 3.7 per cent in September, even as gas prices leveled off.

The potential consequences of the new inflation data emerged immediately. Two Fed officials suggested Tuesday that the central bank may have to hike its key interest rate more quickly to tame inflation. Bigger or faster hikes by the Fed would mean that buying a house or a car, or paying off a credit card would become a steeper hill to climb, with millions of Americans already struggling to make ends meet.

Lorie Logan, president of the U.S. Federal Reserve Bank of Dallas and a voting member of the Fed’s rate-setting committee, said Tuesday that price increases remain high for services such as “visits to the doctor, childcare, dining out and hotel stays.”

“Prices for these services aren’t particularly sensitive to tariffs, conflict in the Middle East or surging demand for computer chips,” she added.

Logan said Tuesday she supported two additional quarter-point rate…

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